Shift to ocean from air as rates go down and port problems ease

Posted by Dynasty

OVER the last two years the air cargo industry has benefitted from a modal shift from ocean to air, but leading forwarders have indicated that the trend started to reverse in the second quarter, according to London’s Air Cargo News.

CH Robinson and DHL Global Forwarding said that during the second quarter there was a shift back to ocean as the cost of container shipping comes down and congestion at ports eases.

“Airfreight conversions back to ocean freight have continued with more shippers seeking lower supply chain costs by tolerating the longer duration of ocean freight transit,” CH Robinson said.

The US-headquartered forwarder registered a 6 per cent drop in air tonnages during the period in part due to the shift back to ocean.

Writing in its second-quarter results, DHL Global Forwarding explained a drop in its air tonnages this year: “Airfreight volumes decreased moderately, in part due to modal shifts back towards ocean freight products, as customers recognised the again improved schedule reliability in ocean freight.”

The firm’s second-quarter airfreight volumes were down 7.7 per cent over the same quarter in 2021 to 477,000 tonnes.

During the peak of the pandemic, the airfreight industry picked up ocean volumes due to the higher prices and disruption in ocean shipping.

This disruption is easing, said CH Robinson, due to easing demand in ocean. The cost differential between the two modes is also edging back up.

Last year, Tom Crabtree, regional director, Boeing Commercial Airplanes market analysis – air cargo, pointed to statistics showing that the higher prices in ocean have narrowed the cost differential between air and sea.

Air cargo prices at the mid-point of 2021 were around six-eight times higher than seafreight, much lower than the traditional price differential of 10-20 times.